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Commentary: Five Key Takeaways from COP24 for Energy

25 January 2019

COP24 President Mr Michal Kurtyka calls to a close the 24th Conference of the parties on 15 December 2018 (Photograph: UNFCCC)

In the late evening of December 15 2018, the gavel came down on the 24th Conference of Parties (COP) in Katowice, Poland, with the President of the conference leaping over the dais in celebration. The outcome of COP24 was heralded by many as a success in multilateralism and diplomacy, and the adoption of the Paris Agreement “rulebook,” a set of rules and guidelines designed to bring the Agreement to life, was no small achievement.

But how does this achievement translate to energy systems in the real world? What signals does it transmit to domestic policymakers and energy sector investors? We outline five key takeaways of COP24 for the energy system and energy transitions.

1. A positive step forward for multilateralism on a common path forward

Consensus agreement on the 133-page Paris Agreement rulebook by almost 197 Parties (196 countries and the EU) represents no small feat in multilateralism. One particular success was the emergence of a single set of transparency guidelines for all countries to report and review information, such as their latest greenhouse gas emissions and progress towards meeting their Nationally Determined Contributions (NDCs, representing national pledges to address climate change under the Paris Agreement).

This approach represents a notable shift away from the existing “bifurcated” approach whereby industrialized and developing countries have different reporting and review obligations, though it still provides flexibility for developing countries who lack capacity.

The collection, reporting, and review of energy and emissions data are fundamental to tracking and driving progress of energy transitions and are also at the core of IEA’s work. The new, enhanced transparency framework negotiated in Katowice reflects a positive step in bringing all countries under a single, robust system, while allowing flexibility to those who need it.

One element of the Rulebook that has yet to be agreed upon regards market mechanisms, covered by Article 6 of the Paris Agreement. Negotiations on this topic will continue through 2019.

2. A call for ambition: energy transitions are underway but must be urgently accelerated

But despite such signs of progress, the pace of global energy transitions is woefully off-track from what is needed to meet global climate targets, and the Paris Agreement has yet to prove itself up to the task of bending the curve. The IEA estimates that energy-related emissions rose in 2018, including in advanced economies for the first time in five years, signalling emissions are moving in the exact opposite direction in which they should. This stark reality was underscored even further by the release of the IPCC’s Special Report on 1.5 Degrees last October, shifting the goal post on the challenge of meeting Paris targets.

With the rulebook in place, the next big challenge for the Paris Agreement is to show that it can result in greater ambition. Countries are expected to submit revised, more ambitious NDCs by next year, returning the spotlight firmly to policymakers in national capitals and subnational jurisdictions, in particular those responsible for energy policy development. But a delicate process of diplomacy, both inside and outside of the negotiations, is important so that no country feels as if it is acting alone.

It was no coincidence that COP24 was held in the heart of Poland’s Silesia coal region. A priority of the COP Presidency was to highlight and spark discussion on the challenges of fossil fuel transition, including the just transition of workers in these sectors. Coal contributes to 80% of Poland’s electricity generation mix, one of the highest shares in the world and 5 million homes in Poland are heated with coal, a fact that could not escape COP24 participants as the smell of coal smoke lingered over the city centre each evening.

These challenges experienced in Poland, but also in many other countries, highlight opportunities for integrating the need to reduce greenhouse gas emissions with other priorities such as air pollution reduction, sustainable employment, and clean economic development.

Globally, fossil fuels continue to form the backbone of the economy, accounting for 81% of global energy supply, a figure that has remained stubbornly unchanged in the last three decades. IEA’s Coal 2018 report showed that despite the advance of renewables, coal remains the largest source of electricity globally and global coal demand is in fact forecast to rise. Yet the IEA’s Sustainable Development Scenario, describing an energy sector aligned with the Paris Agreement, points to a need for global coal use to peak and enter a rapid decline. The tension between objectives and reality is troublingly, still rising.

4. Tracking the progress of energy transitions is fundamental to raising ambition, and IEA has a key role to play

COP24 also saw the culmination of the Talanoa Dialogue, an important process to assess global progress towards Paris goals. Tracking progress is a critical driver of raising ambition and enhancing energy transitions efforts. Not only does it highlight progress made, but it reveals areas of action moving forward as “that which is measured, improves.”

The Talanoa Dialogue drew political attention to the value of tracking progress to meet Paris goals. Looking ahead, collective progress will be assessed every five years starting in 2023 through a more comprehensive assessment process called the Global Stocktake, considering not only emissions reductions, but also adaptation to climate impacts and finance.

Another welcome development from COP24 was growing acknowledgment for the need to explore the full range of options in accelerating energy transitions. While much attention in recent years has been justifiably paid to the impressive growth of variable renewable energy sources, low carbon energy as a whole still only comprises 19% of total energy supplied. To make real progress in decarbonising the energy system, energy transitions must rely on more than just variable renewables but on all available options.

Despite the lack of a final agreement on market mechanisms, the adoption of the Paris Agreement rulebook should be recognized as the multilateral success as it was. However, the pace of energy transitions is far from what is required to meet Paris Agreement goals, and translating intention to practice will require strong, well-coordinated policies that rely on the full array of low-carbon options.